Billing Errors Account for Most Claim Denials, Says GAO

Billing errors, such as duplicate claims and missing information on the claim, result in more private insurance claim denials than judgments about the appropriateness of the service, says a report by the Government Accountability Office (GAO).

For this report, GAO analyzed data from insurers in California, Connecticut, Florida, Maryland, New York, and Ohio, and annual studies produced by the American Medical Association (AMA) in 2008, 2009, and 2010 that included data on the incidence and reasons for claim denial. Data from Maryland showed that the most prevalent reason for claim denials in 2007 was duplicate claim submissions, accounting for 32% of all denials. Also in Maryland, 74% of denied claims did not meet the state’s criteria for "clean" claims, those claims that include all of the required information needed for processing. Among 6 of the largest managed care organizations in California, the 4 that reported on the most prevalent reasons for claim denials in 2009 all reported duplicate claims as one of those reasons.

Denials also frequently resulted from eligibility issues. For 6 of the 7 insurers in 2010 data from AMA, more than 20% of claim denials occurred as a result of eligibility issues such as services being provided before coverage was initiated or after coverage was terminated.

GAO says that state and other data indicated that when denials are appealed they are frequently reversed in the patient's favor. Data from 4 states that the agency identified as collecting data on the outcomes of internal appeals filed with insurers show that at least 39% of internal appeals resulted in the insurer reversing its original coverage denial, many times because the insured or provider submitted addition information.